What it is and why we need it!
So often we become too familiar with words and terms and lose a real understanding of what something is and why we actually need it.
Strategic management is possibly one of those terms that have been dulled with familiarity.
It is important to start by looking at WHY we need Strategic Management.
One of the biggest dangers in business is that our operations (what we do day-to-day) becomes ‘unlinked’ from our business strategy. This is especially dangerous when our business is growing and expanding. To manage the growth we simply keep doing what we have always done and, as required, simply do more of the same to try to accommodate the growth. The management of the business consumes everything and the business tends to ‘find’ its own direction and momentum – and we get taken along simply because we are too busy to do anything different.
When our management is strategic we continually ask the question, ‘are the things we are doing, and the way we are doing them, aligned with our overall purpose and strategy? Are they enabling us to fulfil our promise in a better and better way?’ This strategic focus helps to prevent the drift of the business into areas that are not aligned to our core purpose.
To ensure that the management of our business remains strategic we can then unpack the various elements of strategic management and understand how each element is critical in sharpening the focus, direction and momentum of the business.
Broadly speaking strategic management consists of 2 parts – (i) the formulation of strategy and (ii) the implementation of strategy. Both rest on the foundation of the purpose and core values of the business.
Strategy formulation in turn consists of (i) analysis, (ii) strategy formation and (iii) goal setting. It is essential that we properly assess and understand both our external and our internal environment, to see how we are positioned as a business and diagnose the challenges we face.
This diagnosis lays the foundation for effective strategic decision-making aimed at;
- Competitive advantage
- Market positioning
- Value creation
- Core competencies
- Strategic capability and resource allocation
Planning follows from this that includes;
- Guiding policies
- Strategic objectives
- Critical success factors
- Measurements and scorecards
Only once this is done substantially well can the strategy be well implemented. Strategy implementation consists broadly of (i) structure and (ii) controls and feedback.
In order to avoid the trap of simply continuing to do what you have always done it is vital to start by assessing the organisational structure in the light of the strategy. This entails assessing;
- Organisational structure and leadership – can they deliver the strategy
- Specific initiatives, programmes and investments necessary to facilitate the implementation of strategy
- Any strategic partnerships, purchases or ventures that can leverage the strategy
Finally to ensure that we remain on track feedback needs to be built into our control systems – into our budgets and financial plans and into our incentives. A robust ongoing process of review and evaluation is essential to keep us focused on the right things, moving in the right direction and to build and grow the business’ momentum.
Strategic management is not a static structure or framework but rather it is the dynamic and exciting process of delivering value through our business. We need strategic management in all aspects of our business to keep us relevant and focused – and to facilitate the growth and sustainability of our business into the future.